Last October BT revealed an internal investigation into “historical accounting” errors had unearthed £145m of writedowns. But after calling in external consultants from KPMG, the FTSE 100 firm said yesterday that writedowns had ballooned to £530m.

Surprise

Earlier today, investors were caught on the hop by the news that BT was grappling to pinpoint the cause of the problems at its Italian subsidiary with shares falling by nearly a fifth.

“I was really surprised when I came in this morning and saw the news,” said Richard Marwood, a senior fund manager at Royal London, one BT’s largest shareholders.

“Before we had today, people were concerned about the state with Ofcom and Openreach. Clearly the pension fund has been a bit of an ongoing issue and now you’ve got these trading issues.”

While Italian authorities have opened investigations, UK regulators were monitoring the situation carefully.

A spokesperson for the Serious Fraud Office told City A.M. it was not currently investigating the matter but would not count out doing so in the future.

Accounting watchdog, the Financial Reporting Council (FRC) said: "We are aware of BT's statement about its review of accounting issues in its Italian business and we will consider if these matters require the FRC to investigate whether the auditors fulfilled their duties."